ADX Gold Technical Analysis and ADX Signals

Created by J. Welles Wilder

This a momentum indicator used to determine the strength of a price trend: it's derived from the DMI - Directional Movement Index which has 2 lines.

+DI - Positive Directional Movement Index

–DI - Negative Directional Movement Index

ADX is calculated by subtracting these 2 values & applying a smoothing function.

The ADX is not a directional indicator but a measure of the strength of the xauusd trend which has a scale of Zero to 100.

Higher the indicator value the stronger the market trend.

A value of below 20 indicates that the xauusd market isn't trending but heading in a range.

A value of above 20 confirms a buy or sell signal and indicates a new trend is emerging.

Values above 30 indicates a strong trending market.

When ADX indicator turns down from above 30, it demonstrates that the current xauusd trend is losing momentum.

ADX combined with DMI Indicator

Since the ADX alone is a directionless indicator it's combined with the DMI index to determine the direction of the xauusd.

DMI

ADX & DMI Index

When the ADX is combined with DMI index a trader can determine the direction of the trend & then use the this indicator to determine the momentum of the prevailing xauusd trend direction.

Technical Analysis and How to Generate Trade Signals

Buy Signal

A buy signal gets generated when the +DI is above –DI, & the ADX indicator is above 20

The Exit signal gets generated when the indicator turns down from above 30.

Buy XAUUSD Signal

Sell XAUUSD Signal

A short signal gets generated when –DI is above +DI, & the ADX indicator is above 20

The Exit signal gets generated when the indicator turns down from above 30.

Sell Signal